Largest anesthesiology groups (AMCs)

[ProRealDoc]

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Is this what we can expect in the future? Was unaware some of the publicly-traded AMCs make so much cash.

http://viewer.zmags.com/publication/1facba6d#/1facba6d/14

 

[old_boy]

Is this what we can expect in the future? Was unaware some of the publicly-traded AMCs make so much cash.
http://viewer.zmags.com/publication/1facba6d#/1facba6d/14

Your link states revenues, however this doesn't mean profit. EBITDA or Net Income might be better parameters. With a quick Yahoo Finance search, Mednax appears to be by far the most profitable however these profits seem to be from their neonatal/prenatal business. TMH is barely profitable and EMS has a modest 5% profit margin. I would not say that these companies are raking in the cash, and their margins are *far* below the best pharma, biotech, and device companies. We'll see how this plays out.

Personally, I feel mixed about for-profit corporations employing physicians and staffing hospitals. Given the pricing power of the medicare/medicaid/insurance industry oligolopoly, the only way that docs will be able to protect their incomes is through consolidation and/or hospital employment. However, for profit companies exist to make profit for their shareholders; employees and patients be dam*ed.

 

[bigdan]

nice post!

 

[IN2B8R]

Is this what we can expect in the future? Was unaware some of the publicly-traded AMCs make so much cash.

http://viewer.zmags.com/publication/1facba6d#/1facba6d/14

Steer clear or suffer the consequences: staffing more rooms than you ever felt comfortable staffing, supervising Joe Schmoe, CRNA who usually is less competent than an LPN. They will make loads of money off you and tell you how to do your job. You definitely don't want an AMC to be your boss. Do locum work for them and charge them locum rate, but never accept a permanent job with an AMC.

 

[GoodmanBrown]

Steer clear or suffer the consequences: staffing more rooms than you ever felt comfortable staffing, supervising Joe Schmoe, CRNA who usually is less competent than an LPN. They will make loads of money off you and tell you how to do your job. You definitely don't want an AMC to be your boss. Do locum work for them and charge them locum rate, but never accept a permanent job with an AMC.

What are the upsides to working for an AMC? Clearly there must be some if these companies have hundreds of anesthesiologists on staff.

 

[Mman]

What are the upsides to working for an AMC? Clearly there must be some if these companies have hundreds of anesthesiologists on staff.

Upside?

AMC comes to talk to private group of anesthesiologists about taking over their group. Offers each partner lump sum of $2-3 million dollars and a guaranteed contract to earn a salary for a couple years under them (and then possibly longer should both sides desire).

The partners that sell make $$$$ and then screw anyone else that might come along after them.

The company then can hire people to be permanently on staff or just use locums.

 

[IN2B8R]

What are the upsides to working for an AMC? Clearly there must be some if these companies have hundreds of anesthesiologists on staff.

Well, for losers or newbies, they can have a job.... These companies will hire anyone. Besides, it is not like they are operating in "prime markets," they operate where they have solid footing, more rural areas and certain states (south FL).

 

[countingdays]

Well, for losers or newbies, they can have a job.... These companies will hire anyone. Besides, it is not like they are operating in "prime markets," they operate where they have solid footing, more rural areas and certain states (south FL).

??? I think Houston, Dallas, and Portland are prime markets and not rural.

 

[GoodmanBrown]

Well, for losers or newbies, they can have a job.... These companies will hire anyone. Besides, it is not like they are operating in "prime markets," they operate where they have solid footing, more rural areas and certain states (south FL).

So, the possible reasons someone might go with an AMC are poor performers or folks without much track record or maybe someone tied to a certain location where AMCs are the rule of the land (sick family member, close ties to the community, etc.).

Do AMCs offer extra security? BD's post about the Newport News anesthesiology group getting f***ed was enlightening. With the extra clout and size, do AMCs enjoy a bit more leverage with a hospital? Do they provide extra cost savings that a hospital would be unable to find elsewhere?

Finally, when working with an AMC, is there less worry about the business side of medicine? I can imagine lots of doctors don't want to mess with RVUs brought in and revenue vs. expenses, etc. With an AMC, you do your job, take your W-2 home and forget about the rest of that stuff. Could be appealing to some.

 

[IN2B8R]

So, the possible reasons someone might go with an AMC are poor performers or folks without much track record or maybe someone tied to a certain location where AMCs are the rule of the land (sick family member, close ties to the community, etc.).

Do AMCs offer extra security? BD's post about the Newport News anesthesiology group getting f***ed was enlightening. With the extra clout and size, do AMCs enjoy a bit more leverage with a hospital? Do they provide extra cost savings that a hospital would be unable to find elsewhere?

Finally, when working with an AMC, is there less worry about the business side of medicine? I can imagine lots of doctors don't want to mess with RVUs brought in and revenue vs. expenses, etc. With an AMC, you do your job, take your W-2 home and forget about the rest of that stuff. Could be appealing to some.

Yes.
No and absolutely not.
Yes, but they are robbing you.

 

[IN2B8R]

??? I think Houston, Dallas, and Portland are prime markets and not rural.

I never said ALL of their contracts are rural...

 

[IN2B8R]

There is always extra security in being paid less than someone else would be willing to do the same work for.

Not when your boss is an AMC: there are termination clauses in ALL of their contracts (sky is blue, you're fired! That simple: fired without any cause.) And from a monetary point of view, if there is a provider who is willing to provide your services cheaper than you, then you will get fired so that they can earn yet a greater profit. You are not a shareholder, just a pet on a leash...

 

[IN2B8R]

Where do I sign?

I will get in line right after you. I could use 3 mil right about now...

 

[GoodmanBrown]

Yes.
No and absolutely not.
Yes, but they are robbing you.

So can new attendings who might have had a hard time getting a job for whatever reason use an AMC as a springboard to a partnership track job? Or is there a stigma after working at an AMC for a few years?

 

[Mman]

So can new attendings who might have had a hard time getting a job for whatever reason use an AMC as a springboard to a partnership track job? Or is there a stigma after working at an AMC for a few years?

I don't think there is a stigma, but it's hardly a springboard to anything. The problem with working for the man is that you are just another employee and have no say in how things run.

The whole point of working within a partnership is that you are part owner and share equally in the profits as well as the responsibility of running it. If you want a job at a partnership, get hired and work on their partnership track (for the 2-5 years it takes).

 

[GoodmanBrown]

I don't think there is a stigma, but it's hardly a springboard to anything. The problem with working for the man is that you are just another employee and have no say in how things run.

The whole point of working within a partnership is that you are part owner and share equally in the profits as well as the responsibility of running it. If you want a job at a partnership, get hired and work on their partnership track (for the 2-5 years it takes).

Not to put any value judgments on it, but it seems to me that most Americans (and most people throughout the world) work for The Man. I mean, I'm 29 and have worked at a good number of menial jobs and 2 "career-type" jobs, and every one of them has been working as an employee. I never felt as though my job were constantly on the line in these positions.

Are doctors (or at least those on this thread) against it because with their substantial training, they have feel they have better options? I'm not trying to be obtuse here, and I can see the advantages to working in a partnership group. However, I can also see some mild benefits to working at an AMC. Is the pay really so much worse at an AMC? If you could make up two identical hospitals, one AMC-run and one partnership run, how does your pay fall out? I'd guess:

Non-partner (new guy) < AMC employee < partner

Is this correct?

 

[doctor712]

So, what's being described here is a group like Sheridan Healthcare in South Florida? Am I getting this right? They have tons of anesthesiologists, cover many hospitals, and just about everyone I know working for them is on salary, and really has no true, "CEO-like" ownership? As opposed to a friend of mine in South Carolina, who has 4 true partners and makes real-life biz decisions, shares call with 3 people, makes schedule, runs it HIS way, etc.

Friend of mine just graduated last year is now at Sheridan he makes....
ooops, I almost let that out. Sorry. 🙂 Well, anyway, I know my definition of good money, and, even in anesthesia, I would LOVE to walk out of residency and make this salary about 30 minutes from South Beach. Seems higher, especially in a place like Miami, than you would think...

So, I guess the questions are:

Boss vs Non Boss (true PP seems to win here over AMC)
Money vs Less Money (true PP seems to win here over AMC)
Location vs Crappy Location (moot)
Make Rules v Follow Rules (true PP seems to win here over AMC)
Liability vs Lack Thereof (not from lawsuits, but business-wise, AMC wins, yes?)

From Jet's posts about wisdom of being a new anesthesiologist, seems PP is above and beyond better than working for a place like Sheridan, or even CCFL, where it's all salary and you are a number. So, then, I can only imagine that these are just the jobs these people can get? Or they just want to be in Miami or else, or 1000 reasons I suppose. Personally, I'd rather be 1 of 4 in a niche hospital that does hearts for example, and run the shop. But who knows.

D712

 

[IN2B8R]

Not to put any value judgments on it, but it seems to me that most Americans (and most people throughout the world) work for The Man. I mean, I'm 29 and have worked at a good number of menial jobs and 2 "career-type" jobs, and every one of them has been working as an employee. I never felt as though my job were constantly on the line in these positions.

Are doctors (or at least those on this thread) against it because with their substantial training, they have feel they have better options? I'm not trying to be obtuse here, and I can see the advantages to working in a partnership group. However, I can also see some mild benefits to working at an AMC. Is the pay really so much worse at an AMC? If you could make up two identical hospitals, one AMC-run and one partnership run, how does your pay fall out? I'd guess:

Non-partner (new guy) < AMC employee < partner

Is this correct?

If you don't mind being told what to do, be that for the benefit of the patient or not (since all the AMC cares about is getting cases done, whether it is safe or not), or if you like running 4+ ORs with incompetent CRNA's, have those CRNA's tell you that you are not their "boss," and if you are OK with making at least 100K less than what you would make in a partnership, then go ahead and sign up with the AMC. Those are some of the negatives. So, buyer be ready....

 

[IN2B8R]

So, what's being described here is a group like Sheridan Healthcare in South Florida? Am I getting this right? They have tons of anesthesiologists, cover many hospitals, and just about everyone I know working for them is on salary, and really has no true, "CEO-like" ownership? As opposed to a friend of mine in South Carolina, who has 4 true partners and makes real-life biz decisions, shares call with 3 people, makes schedule, runs it HIS way, etc.

Friend of mine just graduated last year is now at Sheridan he makes....
ooops, I almost let that out. Sorry. 🙂 Well, anyway, I know my definition of good money, and, even in anesthesia, I would LOVE to walk out of residency and make this salary about 30 minutes from South Beach. Seems higher, especially in a place like Miami, than you would think...

So, I guess the questions are:

Boss vs Non Boss (true PP seems to win here over AMC)
Money vs Less Money (true PP seems to win here over AMC)
Location vs Crappy Location (moot)
Make Rules v Follow Rules (true PP seems to win here over AMC)
Liability vs Lack Thereof (not from lawsuits, but business-wise, AMC wins, yes?)

From Jet's posts about wisdom of being a new anesthesiologist, seems PP is above and beyond better than working for a place like Sheridan, or even CCFL, where it's all salary and you are a number. So, then, I can only imagine that these are just the jobs these people can get? Or they just want to be in Miami or else, or 1000 reasons I suppose. Personally, I'd rather be 1 of 4 in a niche hospital that does hearts for example, and run the shop. But who knows.

D712

They do have shareholders (i.e., CEO, president, etc...), you are just not one of them--you are a mere sheep, hearded by the good 'ol boys who are making big $$ off you.

 

[deleted50478]

They do have shareholders (i.e., CEO, president, etc...), you are just not one of them--you are a mere sheep, hearded by the good 'ol boys who are making big $$ off you.

http://www.ama-assn.org/amednews/2007/05/14/prsd0514.htm

 

[penghill]

nice post!

the same opinion to you

 

[IN2B8R]

http://www.ama-assn.org/amednews/2007/05/14/prsd0514.htm

A shareholder at Pinnacle, Dr. Fisher alleged that after he spoke up, the company falsely accused him of drug and alcohol abuse, and medical incompetence, to dismiss him without a fair peer review process.

This guy was a shareholder: he had every right to sue! You are just an employee with any AMC--you have no access/assessment of anything that has to do with billing and you can get fired without cause...

 

[Mman]

However, I can also see some mild benefits to working at an AMC. Is the pay really so much worse at an AMC? If you could make up two identical hospitals, one AMC-run and one partnership run, how does your pay fall out? I'd guess:

Non-partner (new guy) < AMC employee < partner

Is this correct?

It might be correct and there is a lot of variability to it. However, I'd assume that in most instances the AMC employee is making at least $250,000 a year less than what the partner is making. At least that is the situation in 3 groups I know that were bought out within the last few years.


The only people that are better off in the long run when an AMC comes in are the AMC and the partners that got a lump sum payment to sell out. The only possible other benefit to an AMC is that because of size they may be able to negotiate some slightly better rates from insurance companies for reimbursement than what a group currently has, however that depends on how bad the group's contracts are.

 

[GoodmanBrown]

That doesn't happen too often. I think the more common scenario is that the hospital says "as of 90 days from now XXXX AMC will be our exclusive anesthesia provider. We sincerely hope that most of you will agree to sign on with them."

So, In2b8r says that AMCs offer their services no cheaper than a physician-run group. So, why do hospitals dump their group if there's no cost savings?

Does the AMC initially offer huge cost-savings, then jack up the price 2-3 years down the road?

When this happens, does the hospital ever dump the AMC and go back to a physician-run group? Just from reading In2b8r's posts and the clippings on Newport News that BD posted, it seems like AMCs often have their heads up their asses with regard to clinical practices and keeping things running smoothly.

 

[IN2B8R]

So, In2b8r says that AMCs offer their services no cheaper than a physician-run group. So, why do hospitals dump their group if there's no cost savings?

Does the AMC initially offer huge cost-savings, then jack up the price 2-3 years down the road?

When this happens, does the hospital ever dump the AMC and go back to a physician-run group? Just from reading In2b8r's posts and the clippings on Newport News that BD posted, it seems like AMCs often have their heads up their asses with regard to clinical practices and keeping things running smoothly.

Hell, their subsidy may even be higher than the previous PP group! The attraction between an AMC and the hospital admin that gets the previous PP fired is a fluke! (it's a scam!): they come in and give a wonderful powerpoint presentation to the hospital admin, promise a world of coverage to the admin, with "superb" anesthesia care, then, when the old group leaves town (with possibly some remnants from the prior group still on board), the AMC bleeds the hospital to death! They can ask for anything because they have the upper hand in negotiations, plus the admin cannot make 2 stupid decisions back to back, otherwise the hospital board would get rid of the admin--these mistakes are costly.... AMCs = scam artists with a boat load of contractual lawyers who work for the AMC to make sure that their contracts are very proffitable! You, the little bumble bee, have no say-so about anything that has to do with the business aspects of things. Eventually, when the hospital can bleed no more and the surgeons continue to complain about the quality of anesthesia care that their patients are receiving (+/- a couple of law suits from the families whose loved ones have been killed by the AMC's employees), the hospital gives in and gets rid of the AMC for another group--but this may take yeaaaars.... That's how the game is played: it's a sales pitch! They make their money off you, the sucka who is willing to work for them. They have also strong contracts and the assurance of being the "second" group in town, i.e., always a better bargaining position with the hospital admin....I take it you have not come to meet the stupidity of hospital administrations yet? You will, some day....

 

[GoodmanBrown]

Hell, their subsidy may even be higher than the previous PP group! The attraction between an AMC and the hospital admin that gets the previous PP fired is a fluke! (it's a scam!): they come in and give a wonderful powerpoint presentation to the hospital admin, promise a world of coverage to the admin, with "superb" anesthesia care, then, when the old group leaves town (with possibly some remnants from the prior group still on board), the AMC bleeds the hospital to death! They can ask for anything because they have the upper hand in negotiations, plus the admin cannot make 2 stupid decisions back to back, otherwise the hospital board would get rid of the admin--these mistakes are costly.... AMCs = scam artists with a boat load of contractual lawyers who work for the AMC to make sure that their contracts are very proffitable! You, the little bumble bee, have no say-so about anything that has to do with the business aspects of things. Eventually, when the hospital can bleed no more and the surgeons continue to complain about the quality of anesthesia care that their patients are receiving (+/- a couple of law suits from the families whose loved ones have been killed by the AMC's employees), the hospital gives in and gets rid of the AMC for another group--but this may take yeaaaars.... That's how the game is played: it's a sales pitch! They make their money off you, the sucka who is willing to work for them. They have also strong contracts and the assurance of being the "second" group in town, i.e., always a better bargaining position with the hospital admin....I take it you have not come to meet the stupidity of hospital administrations yet? You will, some day....

It's hard for me to believe that hospital admin can be so stupid as to completely **** up their cash-cow ORs because of something as simple as a sales pitch. But, as you astutely guessed, I have no experience with hospital administration thus far. Thanks for the info!


EDIT: I guess BD's entire post is about dumb-ass hospital administration though, so I better wise up on that account.

 

[Girevik]

Hell, their subsidy may even be higher than the previous PP group! The attraction between an AMC and the hospital admin that gets the previous PP fired is a fluke! (it's a scam!): they come in and give a wonderful powerpoint presentation to the hospital admin, promise a world of coverage to the admin, with "superb" anesthesia care, then, when the old group leaves town (with possibly some remnants from the prior group still on board), the AMC bleeds the hospital to death! They can ask for anything because they have the upper hand in negotiations, plus the admin cannot make 2 stupid decisions back to back, otherwise the hospital board would get rid of the admin--these mistakes are costly.... AMCs = scam artists with a boat load of contractual lawyers who work for the AMC to make sure that their contracts are very proffitable! You, the little bumble bee, have no say-so about anything that has to do with the business aspects of things. Eventually, when the hospital can bleed no more and the surgeons continue to complain about the quality of anesthesia care that their patients are receiving (+/- a couple of law suits from the families whose loved ones have been killed by the AMC's employees), the hospital gives in and gets rid of the AMC for another group--but this may take yeaaaars.... That's how the game is played: it's a sales pitch! They make their money off you, the sucka who is willing to work for them. They have also strong contracts and the assurance of being the "second" group in town, i.e., always a better bargaining position with the hospital admin....I take it you have not come to meet the stupidity of hospital administrations yet? You will, some day....

This is absolutely true. I very recently experienced this exact situation. My group had been exclusive to a hospital for a long long time. They replaced us with an AMG. They apparently fell victim to the powerpoint pied piper who promised the world. Believe me the hospital is getting a fiscal beatdown and the guys who stayed are miserable. The AMG is laughing all the way to the bank. As pointed out, the hospital can't now get rid of these guys. They have the admin by the balls. The loss of control is apparently the hardest thing to deal with. Its just sad! My advice if you are faced with this threat is STICK TOGETHER. Once they get a few guys on board, it is over. The incompetence of the replacement guys they bring in will blow your mind.

 

[Mman]

I'm aware of some situations where an AMC negotiates behind a private groups back for a hospital contract. However, most situations I'm aware of involve a group agreeing to be taken over for a lump sum cash payment.

 

[BIS40]

I went to school in Miami and have heard alot of bad things about Sheridan, but at same time alot of people are content with decent salary and just go through motions, since they dominate south Florida (ie whole memorial health system) which I heard is through payoffs to administrations, but this is said about most AMC/Some private groups. Im from Long Island where AMC NAPA has some of NY's best hospitals and I think they have good reputation, other than being an anesthesia employee woeking for them with no partnership. Unfortunately we are in a corrupt field where mama's eat their cubs and few get into a fair/lucrative private practice............these days pp parterships dont mean much though because seems stability long term is fading in many areas, I guess partly brcause of AMC's.

 

[kmurp]

My impression is the opposite. That these groups most often take over a hospital contract without a cash outlay to the existing group. I have no hard facts though.
I'm not sure how many groups are attractive for a buyout. So far, the purchases have almost exclusively been in the southern growth states. I am guessing that the payor mix is better there than in the rust belt, and growth is ongoing (rather than population decline). Other factors that I have read that increase the buyout option are groups with few shareholders relative to the number of rooms run. In this scenario, the smaller number of shareholders can get the 2-3 million buyout. In groups with many physician shareholders, I don't think that the numbers work as well. So the ideal candidate group then, would be sunbelt, small number of partners with additional physician employees and numerous CRNA employees.

 

[Girevik]

There are multiple scenarios under which a "merger" can occur. One is where they buy out an existing group. That one is pretty rare. More common is a bailout of an existing group. Perhaps most common is where they are called in as a replacement and the old group is out. Of course they need manpower particularly if it is a busy practice they are taking over so they will want to retain most of the existing group. This is where their weakness lies but guys have to have a siege mentality to keep the wolves at bay.

The next question becomes how much do they change the structure of the group. Some AMG's just run things from a business angle, they let the group manage itself and just salary everyone. Others are much more involved and will really try to push the envelope on max billing etc. Such entities can be most unpleasant to work for.

I believe the days of smaller to mid size groups may be numbered as administrators have short memories. This is particularly true if your group receives a stipend (almost all do these days) It always comes down to "what have you done for me LATELY?" For this reason your group must be constantly demonstrating their willingness to work and be a team player. Have guys on committees ect. It is no longer good enough to keep your head down and do a good job. You have to do more.

 

[Impromptu]

In this thread I've noticed that most of the negative things said about the AMCs are coming from attendings who work in private groups, which are competing with the AMCs and are thus not entirely impartial. What they say may be true, but everything must be taken with a grain of salt.

 

[Jay K]

In this thread I've noticed that most of the negative things said about the AMCs are coming from attendings who work in private groups, which are competing with the AMCs and are thus not entirely impartial. What they say may be true, but everything must be taken with a grain of salt.

I know it's always enticing to play devil's advocate and/or consider that the poster's have some ulterior motives, but in truth AMC's are not good for anesthesiologist's careers.

The PP attendings have real-world working experience in dealing with contract negotiation, hospital administration BS as well as the constant threats of AMC's coming in to disrupt patient care at a loss to the medical and patient community. Why would you suspect that there's a downside to keeping anesthesia groups local, non-national and not managed by non-clinical physicians or non-physicians?

 

[aneftp]

Upside?

AMC comes to talk to private group of anesthesiologists about taking over their group. Offers each partner lump sum of $2-3 million dollars and a guaranteed contract to earn a salary for a couple years under them (and then possibly longer should both sides desire).

The partners that sell make $$$$ and then screw anyone else that might come along after them.

The company then can hire people to be permanently on staff or just use locums.

That's a big misconception how these AMC's buy out local anesthesia groups.

Here's the real life situation of what they try to do:

Large AMC (was publically traded, now owned by private equity investors; they've done this 2-3 times in the past 20 years...I"m not going to mention their name in a public forum but those of you in the business know who they are)

They come to my sister's anesthesia group in Maryland. They offer a "buyout" of $300K to each partner (not the 1-2 million that most people think). They try to assess groups renegotiate with the hospitals and try to divide and conquer. That's why partners/groups need to maintain a cohesive collecting unit to bargain with hospitals instead of looking out for number 1.

Well with the offer of $300K lump sum payment to each partner, the AMC offers each of the remaining group partners/employees a guaranteed 3 year contract for $100K less each year of what they normally make.

So if they normally make $450K as a partner, the AMC offers them $350K each per year X 3 years.

Guess what happens after 3 years, the "employees" get fed up, but they already lost their hospital contract by agreeing to the buyout. The AMC doesn't really lose any money because they now have the upper hand in negotiations with the hospital since they are the contract holders. A couple of the former partners try to work as little as possible.

Very rarely will you see a multi million dollar buyout. These AMC's try to divide and conquer bickering partners in troubled anesthesia practices whose contract is up for renewal.

The key is to try to negotiate a guarantee payment of at least 5 years with cost of living adjustments. The AMC's will try for only a 3 year guarantee.

My other friend's group negotiated a guarantee 7 year payment when they sold out their practice. They each got $750K and up as part of the deal per partner. Of course they make less money as "employees" but their upfront payment plus the 7 year guarantee makes it worth it. Many of the senior guys in their mid 50's were looking for retirement so it's always a balancing act between the young and older partners.